Lock Tight, Inc., produces outside doors for installation on homes. The following information was gathered to prepare budgets for the upcoming year beginning January 1:

 

Sales forecast in units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         6,500 doors

Finished goods inventory, Jan. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     720 doors

Target finished goods inventory, Dec. 31 . . . . . . . . . . . . . . . . . . . . . . . . . .     680 doors

Raw materials inventory—steel, Jan. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . .        40,000 pounds

Target inventory—steel, Dec. 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        80,000 pounds

Raw materials inventory—glass, Jan. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . .       6,000 square feet

Target inventory—glass, Dec. 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       4,000 square feet

Budgeted purchase price—steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $4 per pound

Budgeted purchase price—glass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $2 per square foot

 

 

The manufacture of each door requires 20 pounds of steel and 6 square feet of glass.

a.       Prepare the production schedule in units for Lock Tight.

b.       Using the production schedule, develop the direct materials purchase budgets for steel and glass.

c.       Why might Lock Tight’s target level of steel inventory be higher than last year’s ending bal- ance and its target level of glass inventory be lower than last year’s ending balance?